Short sale shenanigans.

So, what exactly is short sale fraud? It takes many different forms. Here are a couple of the more prevalent ones across the country:

The selling agent lines up a buyer for the property at close to market value, but submits a different and lower offer to the bank for approval. Often this requires that others need to be involved in this as well, as the lender will send someone to do a BPO (Broker's Price Opinion - similar to an appraisal but performed by an agent hired by the lender). Once the bank approves the lower offer and the transaction closes, the property is then flipped and sold at true market value. The seller is usually not involved in this type of scam, but can be and would then share the profits of the flip. The loser? The bank holding the original mortgage note who got a lot less for the home than it was really worth.

This other form is the one that is more common. Of course, I have no actual proof that it is happening, just clues, many clues, (that even a blind man can see)that point to its existence. It involves the seller always and it takes place when a seller has no intention of really selling the house. His intention is to get out from under the "huge" debt (his original purchase price) and stay in the house at the new, lower price. How does this happen? The "sale" takes place to a known buyer, even though they both sign affidavits that it is an "arm's length transaction" and neither one has anything going on with the other (can we say "perjury"). The seller does not act on his own. His real estate professional (and I use the term lightly) has to be knowingly doing this. You see, there will be requests made by other agents who want to show the property. The listing agent then ignores all those requests to make sure the only offer submitted to the bank is the one mentioned above. (Have you run into a situation were the property is under contract the day it lists!?) Why even list it then? Because it is a lender requirement. Big no no.

Besides the fact that the banks are losing out on huge amounts of money, there are the homeowners in the surrounding areas who are affected as well. The property values are affected by these **** sales and it hurts other homesellers trying to sell their homes at bona fide market value. With a sale such as this one being used by an appraiser, it will be difficult for legitimate home sales to appraise. And until it does, the real estate market will be on shaky ground.